Bankruptcy Chapter 7 vs 13 2027 Comparison
Compare Chapter 7 vs Chapter 13 bankruptcy 2027 — Ch 7 wipes debt (means test), Ch 13 restructures over 3-5 years. See income limits + asset protection.
Chapter 7 (Liquidation)
Fast (4-6 months). Wipes most unsecured debt: credit cards, medical, personal loans. Cannot wipe: child support, recent taxes, student loans (almost never).
Chapter 13 (Reorganization)
3-5 year repayment plan. Catch up on mortgage/car. Save assets that Ch 7 might lose. Pay back 30-100% of unsecured debt (rest discharged). Trustee oversees.
Means Test
Above median income? Must pass detailed expense calculation to qualify for Ch 7. Otherwise forced to Ch 13. Most middle-income filers can structure to qualify.
Asset Protection
Federal exemptions: $25k home equity, $4k car, $14k household goods. State exemptions sometimes higher (FL homestead unlimited).
Source: uscourts.gov bankruptcy guides, abi.org consumer bankruptcy. Last updated: May 2026.
Frequently Asked Questions
Will bankruptcy hurt credit?
Yes. Ch 7 stays 10 years. Ch 13 stays 7 years. But most people score 580-620 within 2 years post-bankruptcy because debt-to-income drops.
Can I keep my house?
Yes if current on mortgage. Ch 7: protect equity up to state exemption. Ch 13: catch up arrears over 3-5 years (saves homes from foreclosure).
Discharge student loans?
Very rare. Must prove 'undue hardship' (Brunner test) — almost never granted. Recent law makes private student loans dischargeable in some cases.